China’s growth

May 14th, 2008 at 12:44pm Bob Trojan

After reading last Sunday’s Editorial titled “Rockford area needs to capitalize on China’s growth”, it made me think about my experiences in developing export and international business. While China is a large and growing industrial economy and our third largest export market, lessons that I learned in developing other international markets can be useful here as well.

On one of my fact finding visits to a number of Chinese manufacturing companies, I quickly learned, from them, that we (U.S.) have competition from Europe and other Asian countries to supply them with products and know how. They do have choices and if you want to service the China market, you must dedicate yourselves to this mission. This takes focus, commitment and contacts.

Preliminary market and product analysis should be made to determine if your product is unique, meets the Chinese technical standards (as in metric or other Chinese specification standards), is price competitive and some idea of sales and engineering support you’ll need. One of the key ingredients of your research is the technical standards that you’ll need to comply with, especially if you are a component supplier. These standards can relate to fit, form, function and even chemistry. As an example, the chemistry of steel in China may not be exactly the U.S. steel specifications. Don’t overlook this aspect of your research.

I have found it beneficial to learn as much as I could about this research instead of simply delegating it to someone else. Getting engaged in the process is important to better understanding. Often times, you are in front of a prospective partner who very often is more versed in his industry’s markets and products. I find they know more about our political and economic happenings than we do about theirs. Be Prepared!

One of the easiest ways to break into a new market like China is to “follow your customer”. One local manufacturer actually had his customer demand that he follow him into India and establish an operation with his customer. Your customer e will have done most of the market research and testing of his products salability thus reducing your risks. Alternatively, search for domestic customers who export into China and you’ll benefit from this supply chain.

If you don’t follow a customer, then looking for a partner in a similar or related business is another method that is effective. This way, you can share in the costs, double up on information gathering and in the end, both come out smarter.

Attending industry or customer specific trade shows has proven to be valuable in the research process. Nothing beats walking the exhibit halls, chatting with customers and competitors and asking questions to further your knowledge of the industry that you will serve. I’ve made numerous visits to exhibitions in Hanover, Germany, Birmingham (UK), Paris, Milan, and China and found these exhibitions to be a wealth of information. Some of the larger exhibitions in the U.S. such as the IMTS this September in Chicago can be beneficial as many of international companies have started to show their products in our country. Exhibitor, industry and market information is also available to take away and study on you air flight back home.

No matter what technique is used, understanding cultural differences are also valuable. Learning some of the language is a good door opener to your international partner. Understanding some of their history can also be valuable. Probably the most important I found is to understand their culture of work and pleasure. That may mean slowing down a little, taking a little longer to make decisions, get to know them as people and taking longer to eat a meal. Cultural understanding goes a long way in building the successful relationships that you need.

Don’t forget to utilize the many local sources such as the State of Illinois Office of Trade and Investment, the U.S. Department of Commerce Export Assistance Center located in Rockford, RAEDC and the Chamber of Commerce will also be of assistance. Seminars such as the recent “Go Global or Get Left Behind” and trade missions are also available to all.

Sounds easy? Not hardly. But if manufacturers think only locally or regionally, we will be left behind. As I mentioned in a recent blog, exports have grown dramatically over the past several years. Take advantage of these growing markets.

If you have some other thoughts, let me know!

Bob Trojan

Entry Filed under: Economy